What is the tax rate for small businesses (S corporations)?
S Corporations pay 1.5% Personal Property Tax Replacement Income Tax (replacement tax). They do not pay regular Illinois income tax. The regular income tax is paid at the shareholder's level. Generally, income from an S corporation is passed on to the shareholders. The shareholders must include this income in their federal adjusted gross income (for individuals) or taxable income (for other taxpayers). This is the starting point for Illinois income tax purposes and where regular income tax is paid.
